PHL 736 Week 6 Ethical Standards Across Countries Example

One Company, Three Countries: Comparing Ethical Standards in Exports and Sourcing

[Student Name]

University of Phoenix

PHL/736: Political Acumen and Ethics

Week 6 Assignment

[Instructor Name]

[Date]

The learner, the company, its partners and all situations are composites written for a model paper.

Platte Valley Foods exports frozen and prepared poultry to Mexico and Japan and buys printed packaging from a supplier in Vietnam. The composite vice president of corporate affairs, whose responsibilities include the company's code of conduct, has been asked to review three situations reported by export and purchasing staff.

Cultural and Institutional Differences

Hofstede (2001) described national cultures along dimensions including power distance, individualism versus collectivism, uncertainty avoidance and long-term orientation, based on surveys of employees in many countries. The framework, together with country scores published in later editions of the work, places Mexico, Japan and Vietnam as more collectivist than the United States and Mexico and Vietnam higher on power distance, with Japan very high on uncertainty avoidance. These are national tendencies, not descriptions of individuals, and they change over time. Institutions also differ: enforcement of anti-bribery and labor laws varies, as do the roles of relationships and intermediaries in business.

These differences matter for ethics. Relationship building through gifts, hospitality and personal trust is more central in some business cultures than in American transactional norms. But cultural difference does not settle what is right.

A Framework for Universal and Local Norms

Donaldson and Dunfee (1994) proposed integrative social contracts theory. Communities, including national business communities, industries and firms, have moral free space to develop their own norms, which are authentic if community members accept them and can exit. Those norms are legitimate only if they are consistent with hypernorms, principles fundamental to human existence, such as respect for human dignity and basic rights. When norms conflict, priority rules guide choices.

The framework rejects both extremes: it does not require every country to adopt American practices, and it does not accept every local practice.

Situation 1: A Payment at Mexican Customs

An export coordinator reported that a customs agent at a border crossing suggested that a cash payment would "move the paperwork faster" for a refrigerated shipment at risk of spoilage.

Analysis: US law prohibits paying foreign officials to obtain or retain business and contains only a narrow exception for small facilitating payments for routine governmental actions, an exception many companies prohibit in their own codes because the line is hard to draw. Mexican law also prohibits bribery of officials. Under integrative social contracts theory, the payment does not reflect an authentic norm accepted by the Mexican business community; many Mexican firms and public campaigns oppose such demands. And paying officials for favorable treatment conflicts with hypernorms of fair dealing.

Decision: the company will not make the payment. It will use its customs broker's formal expedited services, document the request and report it through the broker. The code will prohibit all facilitating payments, with an exception only for payments made under threat to personal safety, which must be reported immediately.

A spoiled shipment costs money once; a payment to an official changes what the company is.

Situation 2: Gifts With a Japanese Importer

The Japanese importer's managers send seasonal gifts to the company's sales team twice a year, in keeping with customary gift-giving periods, and expect gifts in return. The sales team asked whether this violates the code, which prohibits gifts over $50.

Analysis: customary gift exchange of modest value between business partners is an authentic local norm that falls within moral free space. It is reciprocal, open and not tied to particular decisions. It does not conflict with hypernorms.

Decision: the company will allow customary gifts of modest value with private business partners, up to $150 per occasion, recorded in a gift register and approved by the sales director. Gifts will never be given to government officials, and gifts tied to contract decisions are prohibited.

Situation 3: Recruitment Fees at the Vietnamese Supplier

A purchasing manager visiting the packaging supplier learned that many of its workers were migrants from rural provinces who had paid recruitment agencies fees equal to several months' wages, borrowing to do so.

Analysis: recruitment fees paid by workers can create debt bondage, a recognized indicator of forced labor. Freedom from forced labor is a hypernorm. Even if such fees are common in the local labor market, they cannot be justified as a legitimate local norm because they violate basic rights.

Decision: the company will require the supplier to adopt a no-fees policy, under which employers rather than workers pay recruitment costs, to reimburse fees already paid on a schedule and to allow independent verification. The company will help by accepting a modest price increase during the transition. If the supplier refuses, the company will find a new supplier within a year.

Global and Local Approaches

Husted and Allen (2006) studied multinational enterprises and distinguished global approaches to social responsibility, based on standards that apply everywhere, from local approaches that respond to each country's stakeholders and institutions. They found that firms' approaches often reflected institutional pressures more than strategic analysis. The company's policy combines both: global standards for bribery and labor rights, and local discretion within limits for relationship practices such as gifts and hospitality.

What Staff Need in the Moment

The export coordinator at the border had minutes to decide, with a truckload of product warming. Policies help only if staff know them and have an alternative ready. The vice president recommends a one-page guide for export staff listing the expedited options the customs broker offers, a phone number for the compliance officer that is answered around the clock and an explicit statement that the company will accept the cost of a spoiled shipment rather than see staff make a prohibited payment. Staff who refuse such requests will be recognized, not blamed for the loss.

The Cost of Principles

Each decision has a cost: a delayed or spoiled shipment, a slightly higher packaging price and the time needed to monitor gifts and suppliers. The vice president estimates these at well under one percent of export revenue. Against them stand legal exposure, the risk of losing customers who audit their supply chains and the harm to workers that the company would otherwise share in.

Policy Recommendations

Revise the code to prohibit facilitating payments and to define gift limits by context, with a register.

Add a supplier code requiring no-fee recruitment, freedom of movement and lawful working hours, with audits for high-risk suppliers.

Train export, sales and purchasing staff with scenarios drawn from these three situations.

Create a confidential reporting channel for international staff, brokers and suppliers.

Monitoring

The compliance officer will review the gift register quarterly and visit the Vietnamese supplier with an independent auditor within six months, then annually. The customs broker will report any further payment requests, and the vice president will brief the board on all three areas each year.

Conclusion

Comparing standards across Mexico, Japan and Vietnam showed that cultural differences are real but do not settle ethical questions. Integrative social contracts theory allowed the company to accept customary gift exchange, refuse payments to officials and require reform of recruitment fees, each consistent with US law and with hypernorms. Week 7 turns to organizational transformation.

References

Donaldson, T., & Dunfee, T. W. (1994). Toward a unified conception of business ethics: Integrative social contracts theory. Academy of Management Review, 19(2), 252-284. https://doi.org/10.5465/amr.1994.9410210749

Hofstede, G. (2001). Culture's consequences: Comparing values, behaviors, institutions, and organizations across nations (2nd ed.). Sage.

Husted, B. W., & Allen, D. B. (2006). Corporate social responsibility in the multinational enterprise: Strategic and institutional approaches. Journal of International Business Studies, 37(6), 838-849. https://doi.org/10.1057/palgrave.jibs.8400227